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Baht forecast to suffer sharp fall

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Investors should short the Thai baht - which will drop almost 15 per cent by the end of the year - as the balance of payments deteriorates in a resurgent economy, according to a report by London-based Independent Strategy.

The firm, headed by David Roche, expects the baht to reach 44 against the US dollar.

The baht yesterday closed at 38.26 to the dollar.

The currency depreciation will occur as the balance of payments moves into deficit with Thailand's foreign exchange reserves falling as the economy picks up this year, according to the report.

The report has come at a down time for the stock market. Yesterday the SET Index suffered its biggest decline in more than a year, paced by banks on concern they will have to raise money to cover loans that may not be repaid.

The index posted its biggest percentage loss since November 1998, shedding 28.92, or 7.08 per cent, to 379.43.

Analysts said banks' problems had not yet been dealt with properly and debt restructuring of key companies had dragged on.

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